The Zen Centre at 1143 Arawa St, Rotorua.
The freehold and high-profile building at 1143 Arawa St is being marketed by Luke Carran of Bayleys Manukau; Chris Bayley, Bayleys' director of international sales; and Mark Rendell, Bayleys Rotorua salesperson; who are selling it by tenders closing on June 18.
The Zen Centre in Arawa Street is a standalone 9228 square metre building constructed in 1988 in a style similar to Wellington's well-known Beehive executive wing of Parliament Buildings.
Prominent features of the Zen Centre include a high ceiling entrance, marble wall and floor and marble columns.
The 10 storey building comprises ground floor retail and a main entrance and foyer off Arawa St; eight levels of air conditioned office space; and 45 car parks - including 21 secure internal car parks on Level One. Access to car parks is via a service lane from Pupaki Street. The tower levels are serviced by three 900kg or 13-person capacity lifts.
Situated in the middle of the city's main business area and overlooking Rotorua city and lake, the property has a land area of 1649 sq m, and the building has a net lettable area of 8008 sq m over 10 levels. Of this, 5511 sq m is occupied.
The property is leased to a mix of professional, private and government tenants as follows: The Department of Internal Affairs, Department of Labour, Fairfax Media, Legal Services, law firms Rob Vigour Brown, Martin Hine, and Moana Dorset; White Heron Holidays, Temp Resources, The Tree Lab and GMO Renewable Resources. Tenancy leases range from monthly through to 2018.
Carran says the building offers a multitude of options for potential investor purchasers.
"Only about 57 per cent of the tower is currently leased and earning an annual net income of $124,734 per year plus GST. When previously leased to near full occupancy, it was returning more than $1.03 million so there is considerable upside to generating rental revenues if it remains as a purely commercial entity," Carran says.
"Negotiations with existing tenants to extend their leases and terms would also add further value to the property from an investment perspective.
"In its current format, the strength of this investment property is the diversity of tenancies which are spread across multiple business sectors and are underpinned by two government agencies.
"The property occupies a prominent location in Rotorua's central business, and office area. The majority of surrounding buildings are two or three levels, so the Zen Centre at 10 levels dominates the precinct."
Rendell says there is also the potential to alter the building's use subject to council approval - either creating serviced apartments or a boutique hotel, or inner-city apartments. The configuration of these concepts could encompass just the upper levels, or the entire building.
"The central city location of Zen Centre, surrounded within a radius of 200 metres by a number of retail stores, restaurants, cafes, and tourism attractions, enhances its appeal for a multitude of uses," Rendell says.
"With holding revenues being generated from current tenancies, an investor looking to add value through diversification of use can take confidence that there will be income during any required consent application or resourcing periods.
"Plans, fire reports, and valuation analysis have been undertaken to substantiate the viability of unit titling the individual floors, and this raft of documentation is available for potential buyers undertaking due diligence to review."
The building has been evaluated as having a seismic assessment rating of 79 per cent to New Building Standards (NBS) and has a Rotorua District Council rating valuation of $7.04 million.
What's on offer?
The property: The 10 storey Zen Centre.
Location: 1143 Arawa St, Rotorua.
Agency: Bayleys.
Sales method: Tenders closing on June 18.
Features:
• Freehold and high profile in Rotorua CBD.
• Standalone 9228 sq m building.
• Eight levels of air conditioned office space.
•Forty five car parks.
• Mix of government and private tenants.